Bankruptcy Considered —
Why do people file bankruptcy?
Top 5 Reasons Revealed:
In several studies over the years as to why people file bankruptcy, five major reasons tend to be named repeatedly:
- Loss of Income
This is not surprising. When paychecks stop, financial troubles start. In addition, it can mean a loss of health insurance, which can lead to potential medical debt.
- Medical Expenses
The intertwine between work and medical goes both ways. If you lose your job and don’t have insurance, you will have higher medical expenses. If you have medical issues which cause you to lose your job, things are only going to spiral. Health insurance has been a long-standing issue for many.
- Unaffordable Mortgage / Foreclosure
Mortgages represent the largest portion of household debt and homes the largest asset. While we want to be able to keep our property, it is easy to get in over our heads. The market has been crazy the last couple of years with home sales at low interest rates and high value.
- Living Beyond Their Means
Sometimes we just spend more than we have. The credit cards get out of control. The interest never stops. We are eat out more than realized. Shopping is our stress relief. It is hard to see the numbers add up. Many of our Clients are actually surprised when they learn the debt balance they are carrying.
- Tried to Help Other Family Members
This is one area that I feel like we see all too often. Someone that is financially okay – they could get by. Instead, they are going into debt assisting their adult family members. Sometimes it is a Client helping an elderly parent; however, more often, it seems to be a parent helping an adult child. Not the 18- or 19-year-old adult child that is at school and needs a few dollars to get by. The 32-year-old child that refuses to work and is living in the basement playing video games, eating all of the household food, running up the electricity, using the car and gas and . . . oh, and asks if parent can pay on their credit card bills.
Takeaway:
There are many reasons people file bankruptcy. Usually, it is not just one reason. It’s usually a series of events that leads people to our office – the job loss and then the hospital stay. The hospital stays and then the missed mortgage payment. Jonny moved back in and then I had to go to the hospital. We understand that we aren’t the first people you want to visit.
But no matter if you are dealing with divorce, a car accident, student loans, or any other number of debt burdens – bankruptcy offers relief.